Jim’s Notes – April 3th

Moving the Market

The markets gapped lower on concerns about the FOMC and interest rates. The comments from the Fed all day long, and the economic data showing improvements along with inflation, caused angst and the markets gapped lower at the open. Interest rates were higher again. Gold surged along with silver. Crude jumped higher. There was a last-hour attempt from buyers but it was more wishful thinking than buying. The semiconductors gapped down 2.5% and closed lower by 1.5%. On the charts, we saw the NASDAQ, NASDAQ 100 & SP500 break the up trendlines as others tested their respective trendlines. The mega caps are struggling with several short-side setups on the charts. Hints of a banking liquidity issue lowered the sector for the second day. Inflation is still around and many are starting to worry about a resurgence near term. If the Fed offers liquidity to the banks that will ramp up inflation. As we see it the Fed has painted itself in a corner and either way it is going to cause financial stress for the markets. None of this is a positive looking forward. But, we follow the trends and take what the markets offer. Uncertainty is in play and we know the market doesn’t like uncertainty. Expect more volatility along with a test lower as we look forward.

The indexes gapped lower, traded sideways, and had a modest bounce in the last hour. Commodities were higher along with interest rates. The leaders were hard metals, commodities, and energy. Money flow was lower. The RSI was lower as volume remained below average. Two sectors closed in positive territory showing selling on the day. The NASDAQ closed down 0.9%, DIA was down 0.9%, and the SP500 was down 0.7%. The major indexes closed lower. The SOXX was down 1.5%. Small Caps (Russell 2000) were down 1.8%. The ten-year treasury yield was 4.36% up 4 bps for the day. Crude Oil (USO) was up 1.4%. (UGA) was up 1.9%. Natural gas (UNG) was up 0.5%. The dollar was down 0.1%. We are focused on managing the risk in the current environment and letting it unfold.

Wednesday Outlook: The market is in test mode. How much will it test? Based on the breaks of support and trendlines more than some expect. Overnight futures are flat and show no signs of buyers at the open… Crude was higher by 1% overnight. Intel recorded a $7 billion loss in its foundry, and that isn’t going to help the semiconductor sector. Proceed with caution and your stops in place. This is going to get interesting.

Headlines Worthy of Note:

China’s manufacturing sector is coming back to life. It has picked up for the fifth month in a row. Does this mean FXI will head higher? It already has. Technically putting in a double bottom in January/February and offering an entry point at $23. It remains in an uptrend and it the data continues to show improvements it will likely continue the current trend.

Amazon (AMZN) is planning to spend $150 billion on data centers to lead the AI charge. The goal is to maintain its edge over Microsoft and Google in the cloud services market. Chips will come from NVDA and AMAT to run the data centers. VRT will help with infrastructure and networking. Thus, watching the players involved in this process will lead to companies generally benefitting financially similar to Apple’s supply chain.

Charts to Watch: See Notes on “Reality of the Markets” & “Jim’s Beliefs About the Market” pages…

Quote of the Day: “They say marriages are made in Heaven. But so are thunder and lightning.” — Clint Eastwood.

Note of Changes on Website: The ‘Weekend Update & Outlook’ will now reside on the “Reality of the Markets” page. It will be updated throughout the week as needed relative to market changes.

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